Mason v. Hubner

Jones, J., delivered the opinion of the Court. This casé originated in the Court below by the filing of a bill of complaint against the Garrison Park Company of Baltimore City, a corporation, by one of its creditors, alleging that the corportion was insolvent and praying the appointment of a receiver “to take charge of all the books and papers of account, goods and effects, and to collect the debts due to said ⁵⁵⁵ defendant and to preserve or dispose of the same under the direction” of the Court. The defendant in pursuance of a resolution adopted by its board of directors admitted in an answer to the bill all the material averments thereof and consented to the appointment of a receiver. Wherupon the Court, on the ioth of March, 1906, passed a decree appointing Henry H. Hubner and T. Rowland Slinglufif receivers “with the power and authority to take charge and possession of the goods, wares and merchandise, books, papers and effects of or belonging to the said corporation and to. collect the outstanding debts due” thereto; and commanding the “officers, agents and servants” of the corporation to deliver to said receivers such “goods, wares and merchandise, books, papers and effects.” The decree then provided that the receivers should give bond in the penalty of five thousand dollars “conditioned for the faithful performance” of their trust.

Subsequent to the decree the Court passed two orders authorizing specific acts by the receivers which have no relation at all to the question presented on this appeal. Other than these the receivers had not asked for nor had the Court passed any special order up to the 20th of April, 1906. There had been no special authority or direction given to the receivers to sell or dispose of the property of the corporation nor of any part of it. The most considerable part of this property consisted of a tract of land of about 46 81-100 acres.

On the date last mentioned the receivers reported to the Court that they had sold the whole of this land subject to the operation of two mortgages outstanding against it and aggregating the sum of thirty-eight thousand dollars, to one William R. Beatty for seven thousand dollars; that the terms of sale were “cash to to be paid on the day of ratification,” with an adjustment of taxes, interest on mortgages and of certain outstanding contracts affecting minor portions of the land; and that the “sale was fairly and bona fide made and for the most money obtainable for the said property.” Upon this report the Court passed an order nisi “that the private sale of the property * * * be ratified and confirmed unless cause ⁵⁵⁶ -to the contrary ‘should’ be shown on or before the 22nd of .May, 1906,” and directed the usual publication of the order/ On the 19th .of May, the appellant “as a creditor of and a stockholder in” the corporation in question filed exceptions “to the ratification of the private’sale reported by the receiv-ers”—because the price at which the said sale was reported was inadequate; “because the property should have been sold free from the lien of a second mortgage held by him—and he ’.paid the amount secured thereby out of the proceeds of such .sale;” and “for reasons apparent upon the record.” The exceptions concluded with a prayer that the Court should not ratify the sale reported but should order sale to be made of the property at ppbhc auction. On the 28th of May testimony was taken and heard in open Court upon these exceptions and on the 29th the purchaser filed a petition alleging his purchase at private sale of the property in question; that he had ascertained that the receivers had “failed to obtain the previous order of Court authorizing or directing them to sell; and praying the Court to pass an order directing them to sell the property and that such order be passed as of the 19th of April, 1906. On the same day the Court .passed the order from which the appeal here was taken and which is to the effect that the receivers “sell the real estate belonging to the .defendant company, and that this order be entered as of the 19th of April, 1906; that the exceptions to the ratification of the sale reported be overruled .and said sale be finally ratified and confirmed.” We think the trial Court was in error in passing this order. In the circumstances of the case as disclosed from the record and upon the evidence submitted to that Court ratification, of the sale ought' to have been refused.

In France on “Elements of Corporation Law,” sec. 168, it is said of receivers appointed upon the application of creditors alleging insolvency of the defendant corporation, “such a receiver is a mere custodian, ■vested with no title and having no powers of action or disposition other than those given by the Court appointing him.” This is illustrated in the case of Gaither v. Stockbridge, 67 ⁵⁵⁷ Md. 222, in which the nature of the office and the powers of such a receiver were subjects of inquiry. In that case the receivers had been appointed upon allegations in the bill of complaint practically identical with those in the bill in the case in which the receivers here were appointed; and under a decree which conferred powers identical with those in the decree which has been herein recited; and it was there held that the receiver was “the ordinary chancery receiver;” that he was “clothed with no estate in the property” but was “a mere custodian of it for the Court” who by special authority might “become an officer of the Court to effect a sale of the property, if that be deemed necessary for the benefit of the parties concerned.” The receivers here then had no such right or interest in, or power over, the property placed in their charge by the